Indian Prime Minister Narendra Modi has introduced a significant initiative aimed at bolstering private investment in research and development through the establishment of a ₹1 lakh crore (₹1 trillion) Research, Development and Innovation (RDI) Fund. This fund is designed to facilitate innovation and align with India”s vision of a developed nation by 2047.
The Department of Science and Technology will oversee the RDI Fund, which will utilize a two-tiered funding structure. Initially, a Special Purpose Fund (SPF) will be established under the Anusandhan National Research Foundation (ANRF), which will manage the ₹1 lakh crore corpus as its custodian.
Importantly, the RDI Fund will not invest directly in industries or startups. Instead, it will provide capital to second-tier fund managers, which may include Alternative Investment Funds (AIFs), Development Finance Institutions (DFIs), and Non-banking Finance Companies (NBFCs). These managers will make recommendations for funding through investment committees consisting of experts from finance, business, and technical fields, all of whom will operate independently of the government.
The fund is expected to offer long-term, low-interest loans to corporations or equity investments in startups. Projects eligible for support must prioritize advanced research and development in critical areas such as energy, biotechnology, medical devices, deep technology, or artificial intelligence. There is no cap on the investment amount, and larger corporations can participate, provided they contribute at least 50% of the project costs.
This initiative aims to address the current disparity in private sector R&D spending in India, where private investments account for only 30-35% of total R&D expenditures, in stark contrast to approximately 70% in more advanced economies. By supplying patient capital and mitigating the risks associated with early-stage investments, the RDI Fund aspires to rectify this imbalance and stimulate greater private sector involvement in research and innovation.
